COLUMN - Straight from the Hip

The Value of a Marketing Relationship

by Brenda Schoepp

The term “dumping” has been used by livestock producers for years in reference to selling their calves and feeders. In a heartbeat, the years production is loaded up and “dumped” into a nearby market. The seller has not given the buyer or the representative of the cattle any support in finding value in the livestock. A marketing relationship does not exist.

Regardless of how you sell your calves and feeders, there must be a relationship in place in order to best represent the cattle. The local auction market needs to know ahead of time when the cattle are coming in, how many there are, what health protocols have been administered, if the cattle can be age verified and have copy of the supporting documentation. Without this communication, your cattle risk falling into below or average pricing. These simple basics are of value to the buyer, in auction, electronic, direct, contract and consolidated sales. The act of communicating this information is the basis of forming a marketing relationship.

Remarkably, the majority of the calves and feeders on offer still fall into two categories: under managed and consequently under priced cattle and average cattle that are sold on an average price. There is a value to the buyer in procuring cattle at or below the average only in terms of price. The realized potential in the cattle is completely lost without a prior relationship with the seller. Often, sellers of cattle “do all the right things” and may have significant numbers to drive a decent floor price, but walk away disappointed because their work was not rewarded in the marketplace. But then again, who knew?

It takes effort on the sellers’ behalf to expose themselves to the buying market and discover the needs of their client. The client of the cow calf producer is the feeding industry. As the feeding industry evolves and their markets change, so do their inventory needs. Most cattle on feed are now individually tracked, tested and managed. Today, your cattle placed in a feedlot, will likely have individual health and performance data. That information is of value to the cattle feeder and to you. Building a relationship with your client allows for you to compare your cattle and together with the feedlot to establish value, so that it moves up and down the chain. It also gives the feedlot an opportunity to know who you are and approach you with a value proposition. This may be based on age verification, overall health, exceptional conversion, tenderness, carcass qualities or other targets that they may wish to meet in house. Through the relationship, you have the opportunity to create value for the client and be rewarded for this effort.

The value loop is a wide one, and in order for the concept to work, each player must be rewarded. The cattle feeder has to meet the ever-changing needs of their client – the packer. Certainly, cattle feeders still purchase second cut cattle at drastically reduced prices and pick up the profit on the buy side, but increasingly they directly procure predictable cattle that have value within their marketing systems. The door is wide open for cow calf producers to engage with the feeding industry and to form lasting relationships that share technical information for the establishment and reward of value.

- Brenda Schoepp is a market analyst and the owner and author of BEEFLINK, a national beef cattle market newsletter.
She ranches near Rimbey, Alberta.